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The Impact of the 2017 Tax Cuts and Jobs Act on U.S. Multinationals’ Intangible Assets

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  • Ana Maria Santacreu
  • Ashley Stewart

Abstract

This paper investigates the impact of the 2017 Tax Cuts and Jobs Act (TCJA) on U.S. multinationals’ intangibles. We develop a theoretical model that incorporates key provisions of the TCJA—the Global Intangible Low-Taxed Income (GILTI) and the Foreign-Derived Intangible Income (FDII)—and derive testable implications for changes in licensing and patent transfer patterns. Using data on international royalty flows and patent assignments, we test the model’s predictions. Our findings suggest that the TCJA may have impacted profit shifting strategies through intangibles, aligning with our model’s predictions.

Suggested Citation

  • Ana Maria Santacreu & Ashley Stewart, 2024. "The Impact of the 2017 Tax Cuts and Jobs Act on U.S. Multinationals’ Intangible Assets," Working Papers 2024-020, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:fedlwp:98710
    DOI: 10.20955/wp.2024.020
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    References listed on IDEAS

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    1. Karkinsky, Tom & Riedel, Nadine, 2012. "Corporate taxation and the choice of patent location within multinational firms," Journal of International Economics, Elsevier, vol. 88(1), pages 176-185.
    2. Gabriel Chodorow-Reich & Matthew Smith & Owen M. Zidar & Eric Zwick, 2024. "Tax Policy and Investment in a Global Economy," NBER Working Papers 32180, National Bureau of Economic Research, Inc.
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    4. William G. Gale & Claire Haldeman, 2021. "The Tax Cuts and Jobs Act: Searching for Supply-Side Effects," National Tax Journal, University of Chicago Press, vol. 74(4), pages 895-914.
    5. Jesse LaBelle & Ana Maria Santacreu, 2023. "Global Profit Shifting through Intellectual Property and the Impact of US Tax Reforms," Economic Synopses, Federal Reserve Bank of St. Louis, issue 10, pages 1-2, May.
    6. Griffith, Rachel & Miller, Helen & O'Connell, Martin, 2014. "Ownership of intellectual property and corporate taxation," Journal of Public Economics, Elsevier, vol. 112(C), pages 12-23.
    7. Dyrda, Sebastian & Hong, Guangbin & Steinberg, Joseph B., 2024. "A macroeconomic perspective on taxing multinational enterprises," Journal of International Economics, Elsevier, vol. 152(C).
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    Keywords

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    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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